December 10, 2009

A Surprising New Ruling by IRS Regarding Child Support

Recently, the Seattle Times reported that the IRS determined that a single mother of two who worked as a hairdresser could not claim her children as dependents on her tax return, because she could not prove that she provided over 50% of their children’s support. This is a surprising result, since, in this case, it leads to the anomaly that no one can claim these children as dependents.

Tax Law, Child Custody, and Tax Planning

Although I am not a tax lawyer, as a family law attorney, I am often asked to help my clients allocate the dependency exemptions fairly. Parents are able to trade dependency exemptions back and forth quite liberally, regardless of who provides the most support, or who the children live with most of the time. The default is that the parent who has custody most of the time is entitled to the dependency exemption. However, tax planning often dictates that the other parent will get the most use of the dependency exemption. Often, families simply want to divide the tax benefit by alternating the dependency exemptions.

Apparently, however, if the hairdresser’s case is taken as new law, low-income tax payers will need to maintain records as to how much they’ve expended on support for their children. See the IRS Guidelines for more information.

Old fashioned thinking and the law

The first article is “Daniel Boone on Broadway,” In it Mr. Palmer points out that “Daniel Boon on Broadway is no more of an anachronism than the individual who carries the psychology of the frontier into the cooperative life of today.” We sometimes see this phenomenon in our family law and probate law practices, where someone seems blind to the reality that a divorce involves not just the plaintiff and the respondent but also, any and all children from their union. Their case also involves not just property but also the standard of living of the two sides – and that of the children. I think a law firm should strive to be the most reasonable party in the room – it should defend you, the client, but it should also bear in mind that others – especially the children – also have rights and that the adults have obligations. I think Mr. Palmer is making an important point for all of us

Rugged individualism is not an asset in a lawsuit

In the second article, “The Bug on the Brontosaurus,” Mr. Palmer refers to a nation of “streams of force – economical, social, political, religious – converging on certain focal points… The most romantic libertarian… can only act effectively through those organizations whose general goal coincides with his own heart’s desire. There is no such thing as splendid isolation.” Again, excellent point! In a divorce, child support dispute, child custody lawsuit, as well as in an alimony or probate case, these organizations that can be used for the outcome you seek include the law, the courts, your own attorney, and the opposing party’s lawyer. Otherwise, your case and the outcome you seek, will pass away to become as extinct as the once-mighty brontosaurus.

Read the article! I think you’ll find this wisdom, and much more, in it.

Mr. Palmer concludes that “There is no such thing as splendid isolation… It is adaptability, and not merely strength, that counts.” Again, read the article! Mr. Palmer makes his point with much more grace, and brings to bear much more experience, than can I.

November 24, 2009

I ran across a review for the movie Couples Retreat. The review makes it sound like the movie might not be worth the price of a matinee, but I wholly endorse the concept of marriage counseling.

There really are couples retreats out there that might help a marriage stay together. For example, there is a retreat in Vermont called “Marriage Quest“, and in Sedona, there’s a couples’ retreat called “Sedona Soul Adventures – a place I’d certainly like to go some day!

You don’t need a vacation therapy retreat, though. Marriage counseling with a licensed professional may be just as effective. You can obtain a referral from your family physician or therapist. One local therapist here in Minnesota who offers marriage counseling is Janet Schlegel, located in the northwestern suburbs of Minneapolis and St. Paul.

November 17, 2009

When you owe a debt to the government, they may intervene in your divorce to collect. Consider the case of Walter and Caren Forbes, who were married 27 years. Walter was the former chairman of Cendant Corporation, who was sentenced to 12-1/2 years in prison for the largest financial fraud of the 1990’s. When his wife Caren filed for divorce earlier this year, the federal government intervened in the divorce to collect money owed pursuant to an Order of restitution against Walter. The divorce may result in the receipt of billions of dollars in restitution.